Friday, 29 January 2016

The EU is not a trade bloc - it's a power cult

fig1. The profit motive for safety at sea

Georgia and Turkey have taken a significant step this week in strengthening the digital link between them by agreeing to electronically exchange customs data so that transport across the Georgian-Turkish borders will be faster and cheaper. The two countries signed a Protocol on electronic data exchange in the framework of a joint eTIR Pilot Project.

The TIR procedure is governed by a multilateral treaty, the TIR Convention (Transports Internationaux Routiers), and simplifies border crossing by establishing a customs transit system allowing sealed trucks and containers to cross multiple borders with a single customs document and a unique guarantee, thus increasing speed and decreasing costs of international transports while protecting governments against the loss of duties and taxes.

The eTIR pilot project will improve the benefits brought by the TIR Procedure by ensuring the advanced electronic exchange of data related to TIR transports crossing the Georgian-Turkish borders. One of the key aims is to improve risk assessment procedures, that is to say allowing governments to evaluate the risk of a TIR transport passing through their countries well in advance of it reaching their border and, thus, help to prevent smuggling, terrorism, illegal trade and immigration.

The eTIR pilot project between Georgia and Turkey started as part of the UNECE led project "Strengthening the capacities of developing countries and countries with economies in transition to facilitate legitimate border crossing, regional cooperation and integration" and represents a significant step towards the full computerization of the TIR procedure.

In other news, Pakistan will begin enforcement of the TIR Convention from this week. “Joining the TIR would facilitate trade with Economic Cooperation Organisation (ECO) countries and China through land routes,” said an officer in the Ministry of Commerce. He said that the customs’ control measures taken in the country of departure would be accepted by all countries of transit and destination. “At present, Pakistan has to pay 101% guarantee to Afghanistan to reach the Central Asian countries.”.

The implementation of the TIR system is also expected to further enhance and ensure viability of capital intensive projects at the ports of Karachi and Gwadar. Before this convention, Pakistan had difficulties in conducting trade through land routes with the Central Asian States, Turkey and Europe as there was no mechanism that could provide protection from customs duties and taxes in transit countries.

The United Nations Economic Commission for Europe introduced the TIR convention in 1975 which became effective in 1978 and it has been a key component of the European single market. Now we see the rest of the world catching up. We would note that through a common multilateral framework, it is entirely possible to have harmonisation of trade and commonality of systems without nations surrendering their right of veto or ceding essential sovereignty.

So too would we note that this is part of a global drive to harmonise trade, increasing in urgency as all players are acutely aware of the need to maximise efficiency and therefore profitability on the brink of a global slowdown. In this we see a global push to remove technical barriers to trade with UNECE and other major international organisations driving it.

But as some would remark, the European Single Market is so much more than mere administration and harmonisation. That's true. It's also about health and safety and welfare of the worker - in which again we see joint collaborative efforts from all quarters. One area of concern is the uneven weighting of containers which has serious ramifications for both profitability and safety of trade.

In this we see a drive for harmonised procedures in weighing containers before loading. Injury and loss of life is an expensive thing, and stacking accidents can set off chain reactions resulting in the loss of massive container ships with all their cargo. Such is more common than I ever understood and is bizarrely ignored by our media.

To get an idea of the issues surrounding container weighing, it's worth watching the two videos on this link. It prompts all manner of technical questions in achieving global harmonisation. When a container without a signed weight declaration shows up at a marine terminal as of July 1, when a new SOLAS rule takes effect, what happens next?

Will the terminal allow the container in, hoping that the weight will arrive in time for the container to be handled and loaded without having to be pulled aside? Or does the terminal avoid the risk, telling the carrier and its customer that containers without the Verified Gross Mass won’t be allowed in under any circumstances?

This is where we see shippers themselves working in collaboration with the International Maritime Organisation and UNECE and the International Standards Organisation to establish global conventions, in which there is a major financial and competitive advantage in seeking commonality and a rapid resolution.

The framework for such is the WTO Trade Facilitation Agreement, involving technical agencies, the Global Alliance for Trade Facilitation, the ILO and the likes. In this, modern European ports will likely have few problems in meeting agreed standards by way of being modern, integrated and at the forefront of standards development.

Now the reason this article is not as detailed and granular as you might expect is to avoid getting bogged down in the masses of fascinating detail, and getting distracted by any number of branch issues. The point is, we are seeing the emergence of a global single market, where the push for standards and safety comes not from government but from the shippers and exporters themselves, seeking to bring down the costs, in which safety is a huge part since insurance is also a massive overhead.

In this regard, the industry is light years ahead of the legislative process and has no real difficulty implementing law in that bodies like the EU effectively codify that which is already in place or in the process of completion. If anything, they are rubber stamping common sense in the same way nation states would (but without the democratic safeguards).

What we do not need is the EU adding further complications by gold plating, thus creating more technical and regulatory barriers to trade, which is why ISO standards take precedence over EU standards. Just one agreement on mutual recognition of standards between the main standards bodies does more for the free movement of goods than the EU has managed in the last twenty years.

In this, the system is largely self-enforcing, in that things don't work if procedure is not followed and delay costs money. Compliance is voluntary but deviation has major costs, and losing ISO accreditation means a loss of business. Obviously though such conventions do need laws in order to tackle the more egregious abuses that cost the people, where there are negative externalities, particularly when the process pollutes and harms the environment. Again there are a global bodies involved.

At these point we can argue until the cows come home as to the EU's role and influence in all this, but the stark lesson here is that the EU is a recipient of global laws and is becoming ever more sidelined as global bodies become more assertive, where the EU's own interference is more a nuisance than a contribution.

While the EU and the UK is bogged down in a parochial discussion about the EU, the world of regulation that sits over and above the EU is far more fluid, complex and unaccountable in ways that would make even the EU blush. In essence we are beset by a euro-parochialism, obsessing over the EU when the EU is not the be all and end all of trade - and in terms of creating a global single market in goods and services, we are largely barking up the wrong tree.

What we can also say is that if the EU didn't exist, given how things stand, we wouldn't be in a rush to invent it. We would be looking to formalise and democratise the global bodies and improving their function. What we can also say is that trade facilitation is the ultimate driver of wealth and prosperity and the corporates themselves are more effective than any aid agency at delivering exactly that.

While there is every advantage in having a common European platform, pooling resources, economic clout and expertise in order to shape it as we would wish it, reducing negative externalities of trade, nowhere does it seem evident that a global single market cannot be achieved unless nations surrender their ultimate sovereignty, their seat at the top tables and abandon their ability to self-govern. Multilateral international cooperation works, and the EU is less important than other major international bodies like the UNECE.

A European bloc that can come to the table with a common position in advance of global trade talks is nearly always advantageous for the sake of political expediency, but at other times, it is more relevant if there is a common position between nations sharing particular industries and interests. And that is where the EU no longer serves our interests, if ever it did.

What we see is that the European common position is one derived from a political agenda, through supranationalism, overriding the national veto and taking shortcuts with democracy at the expense of real jobs. This is not multilateralism and cooperation. This is subjugation. The EU is just not about cooperation.

At the heart of it is a paranoia that without the EU the nations of Europe will once again be at war thus have set about creating a Europe that deprives nations of their democratic will to the ends of creating a single supreme government for Europe - one which actively prevents European nations speaking on their own behalf and getting the best for themselves and Europe.

And so when the question is posed as to what it would take for us hardline leavers to change our minds, we would have to address the central issue. Supranationalism. Were the EU to abandon supranationalism, to dismantle the institutions and cultural programmes designed to engender a single European demos, culture and government, to instead become a common forum for international progress, then I could change my mind. But then I would want to see it as a more open forum where our trading partners can also participate and shape the rules rather than having the EU dictating.

There are two basic problems here. Firstly, the entity a properly reformed EU would resemble already exists. It's called the United Nations Economic Commission for Europe, and secondly, to demand reforms of this nature - of such era defining significance, we would effectively be calling for the dismantling of le grande project forever.

And so it remains the case that we are hard line leavers in that the EU cannot be reformed, will resist any attempt, and will never serve the best interests of its members - or even Europe. The EU is purely about the preservation of the EU political body that serves to advance the supranational agenda of its long dead architects.

The EU is not about trade, it is not about cooperation and it wouldn't recognise multilateralism in a billion years. Everything it does is with the intent of affording itself more power and more control while passing the responsibility and the consequences on to member states to deal with. It is here where nuisance turns to malevolence and such an affront to democracy, based on a foundation of intellectual sand, should be resisted.

If we examine EU for what it really is, it's a power cult - and one that will never stop until it holds all of the power. It confiscates our wealth then acts like some kind of benevolent Father Christmas, buying off all the institutions such as academia, NGOs and local authorities who would otherwise oppose it, so that when it comes to a popular vote the establishment will never turn on its paymaster.

It is for this reason true leavers oppose the EU with every fibre of their being. It is why opposing the EU is a spiritual call and a life obsession. It is why the issue will never go away and it is why a referendum will not settle the argument - because for as long as there are those who know what the EU really is, and its modus operandi, there will always be people willing to fight it to the bitter end.